Disasters create bigger, not better, government

Amity Schlaes

NEW YORK - Whew. That was the general reaction when President Barack Obama told waterlogged New Jersey that "we are here for you." After all, these days, a president is expected to "be here."

Federal rescue is the American Way. Being there starts with helping to clear the flooded metropolitan-area tunnels between New Jersey and New York. But the concept extends to bridges, roads and all the other infrastructure challenges up and down the Atlantic coast after Hurricane Sandy.

Such rescue seems like a no-brainer during crises.

Yet the misty deification of Washington as exclusive rescuer isn’t necessarily warranted. In fact, the United States suffers from a collective and politically induced amnesia that obscures the reality: There are many American ways to build infrastructure and manage it in emergencies. In the past, state and regional governments often managed disasters. Even businesses ran big domestic rescues.

A good example of this can be found in the history of one tunnel flooded this week, the Holland Tunnel, between New York and New Jersey. About 100 years ago, New York longed for commerce with New Jersey and was desperate for it. In the winter of 1918, for example, the city was so short of coal that the press spoke of "coal famine." An ice jam in the lower Hudson River prevented thousands of tons of coal in New Jersey from reaching Manhattan. The coal could be seen from freezing New York, but, as Governor Al Smith recalled, "we were nevertheless unable to get it across."

Engineer Clifford Milburn Holland conceived a daring plan: a giant tunnel under the water. A new kind of ventilation would remove the fatal carbon-monoxide gas from the tube. The construction itself caused its own share of emergencies.

Yet all these crises were handled, and not catastrophically, by local authorities. The Holland Vehicular Tunnel, as it was called, was conceived, as Smith said, as "the wedding of two commonwealths," the states of New Jersey and New York. The two states financed the projects: "New Jersey through a bond issue and New York through current revenues," Smith announced proudly. Such states sought the blessing of the federal government, not its presence.

Nor was the Holland Tunnel the exception. Looking over American history, state or city authority in infrastructure was often the rule. Except during wars, state governments played a larger role in the economy than Washington. That relationship only reversed in the mid-1930s, with President Franklin Roosevelt’s New Deal.

The reversal hasn’t always generated the greatest quality of work, or the greatest efficiencies. Indeed, the angel being called to drain the tunnels, the U.S. Army Corps of Engineers, is also known for wasting federal taxpayer money on dubious, pork-barrel projects and creating more problems than it solves.

Why has the federal role expanded?

One reason is another kind of flood: government spending. Once it rises, often to address an emergency at home or abroad, the spending doesn’t recede. High water becomes the new normal, until the next emergency, when a second rise comes, as an economist named M. Slade Kendrick noticed as far back as 1955.

In a National Bureau of Economic Research paper titled "A Century and a Half of Public Expenditures," Kendrick noted that from the War of 1812 on, one kind of emergency - war - tended to raise the level of all federal spending, not just for the duration of the war but also for the period after. That spending increased for civil projects as well as for military outlays. The reasons for this are probably as much psychological as mathematical: When people are in a state of fear, they get in the habit of looking to big protectors.

Another scholar, Robert Higgs, has pointed out that the larger the government is, the more states kowtow to it. When federal money is available, whether from the Federal Emergency Management Agency or another source, only a foolish governor would ignore that cash. That is why New Jersey’s Chris Christie, a Republican, asked for help from the Army Corps of Engineers this week for beach restoration, and walked arm in arm with Obama. Natural disasters make even the feistiest Republican say, we’re all Democrats now. As the pundits are already saying, the proximity of Hurricane Sandy will probably help the party of larger government, President Obama’s.

It’s important, though, to remember that the only reason voters or politicians place so much faith in Washington is that they can scarcely remember a time when the federal government wasn’t the rescuer. And that doesn’t mean the past never happened, even in the Holland Tunnel.

Amity Shlaes, a Bloomberg View columnist, is the director of the Four Percent Growth Project at the Bush Institute and the author of the forthcoming "Coolidge."